Jens Martin Jensen - CEO of Frontline Management AS Inger Klemp - CFO of Frontline Management AS John Fredriksen - Chairman, CEO, President and Director

Jon Chappell - Evercore Partners Taylor Mulherin - Deutsche Bank Herman Hildan - RS Platou Markets Matthias Detjen - Morgan Stanley Erik Paulsson - Pareto Securities

Good day and welcome to the Q1 2014 Frontline Limited Earnings Conference Call. This conference is being recorded. At this time, I would like to turn the conference over to Jens Martin Jensen. Please go ahead, sir.

Thank you. Good morning, good afternoon, and welcome to our Q1 2014 presentation. We will follow our usual program for the presentation with Inger going through the Q1 highlights and main transactions, financial review of the quarter and then an update of our changed newbuilding program. After that, I will follow-up with some market comments and give some comments of the present market and our own situation. So Inger if you could start, please?

Thank you and good morning and good afternoon, ladies and gentlemen. Moving down to Slide 4, highlights and transactions. In April 2014, Frontline agreed with Rongsheng Shipyard to swap its two Suezmax newbuildings on order with two similar Suezmax vessels from the same shipyard at a lower contract price. The first vessel was delivered on May 19, 2014 and the second vessel has estimated delivery in September 2014. The Company issued 8.8 million new shares in the first quarter further to the ATM offering launched in June 2013, and further 1.6 million new shares in April of 2014. Moving down to Slide 5, financial highlights and Slide 6, income statement. Frontline reported net loss of $12.1 million equivalent to a loss per share of $0.13 in the first quarter of 2014. This compares with a net loss of $13 million and a loss per share of $0.15 for the preceding quarter. The net loss attributable to the Company in the first quarter includes a loss on the sale of the VLCC Ulysses of $15.7 million. Net income excluding gains and losses in the first quarter was $3.6 million, compared with a net loss of $14.1 million in the fourth quarter. The improved results from operation in the first quarter compared to the fourth quarter, is mainly due to increase in TCE rates in the first quarter compared to the fourth quarter, which led to an increase in the sales on time charter basis by $25.3 million. The increase in the sales on time charter basis led to the increase of $13 million in cash repayments to Ship Finance and German KGs. Moving down to Slide 7, income on time charter basis. Frontline's double hull VLCC fleet earned $32,500 per day in the first quarter compared with $21,600 per day in the fourth quarter. The average for the whole VLCC fleet was about $32,700 per day in the first quarter compared with $22,400 per day in the fourth quarter. The Suezmax fleet earned some $27,700 per day in the first quarter compared with $12,900 per day in the fourth quarter. Moving down to Slide 8, ship operating expenses off-hire, average OpEx for the fleet in the first quarter was approximately $8,900 per day, compared to approximately $9,000 per day in the previous quarter. We dry docked no vessels in the first quarter compared with one vessel in the fourth quarter, as you can see from the graph on the upper right-hand side of the slide. As you can see from the graph on the lower right-hand side of the slide, off-hire days were 22 in the first quarter compared with 11 days in the fourth quarter, since we had more unscheduled off-hire in the first quarter. We had one scheduled dry docking in the second quarter of 2014. Moving down to Slide 9, balance sheet. Changes to the balance sheet end March 31, 2014 is mainly as follows. Cash increased by 57 million mainly explained by equity rates. Restricted cash in ITCL increased by $6.5 million, as a consequence of proceeds received in connection with the sale of the VLCC Ulysses partly offset by loan repayments on the ITCL bonds. Vessels and equipment and vessels under capital lease decreased by $64 million, which relates to the sale of the VLCC Ulysses and quarterly depreciation. Current portion of long-term debt increased by 43 million, mainly as a consequence of that old bond debt in relation to the VLCC Ulysses, has been presented as short-term, as it will be repaid in the second quarter of 2014. Long-term debt decreased by $62 million as a consequence of debt moved to short-term and repayments in the quarter. Equity increased as a consequence of equity rates partly offset by losses in the quarter. Otherwise there are small changes to other balance sheet items this quarter. Moving down to Slide 10, cash cost breakeven. The estimated average cash cost breakeven rates for the remainder of 2014 are approximately $25,200 per day for the VLCC and $17,800 per day for the Suezmax. These rates are the daily rates our vessels must earn to cover budgeted operating costs and dry dock, estimated interest expense, payable at hire and corporate overhead costs. The rates are somewhat higher for the VLCCs due to the fixed plan VLCC dockings invest for 2014. The breakeven rates exclude CapEx and ITCL vessels. Moving down to Slide 11, newbuilding overview. As of March 31, 2014, Frontline’s newbuilding program comprised two Suezmax tankers and the Company was committed to make newbuilding installments of 87.9 million to be paid in 2014. In April of 2014 Frontline agreed with Rongsheng to swap its two Suezmax newbuildings on order with two similar Suezmax’s vessels from the same shipyard, at a lower contract price. Installments paid to-date will be allocated to the new vessels. The first vessel was delivered on May 19 following the payment of the final installment of 41.5 million and the second vessel is expected to be delivered in September 2014. The Company is committed to making payments of 41.5 million as of the date of this press release with expected payment in September 2014. Moving down to Slide 12 the Frontline fleet, the number of vessels in the Frontline fleet currently is 46 vessels including the vessels on commercial management and ITCL vessels and is compounded by 29 double hull VLCCs and 17 double hull Suezmax. And with this I will leave the word to Jens again.

Thank you, Inger. We are now to Slide 13 markets the quarter or year started on a high note with a very active Atlantic market and increased tonne mile voyages mainly into China whom was suggested adding extra crude to their strategic reserves this led to some position tightness and almost managed to press the rates up. Unfortunately in February the market started to slide and I think the talks of a crude market recovery may have been a bit premature. We are now back to rates at operating levels some trades even below operating levels. The VLCC fleet development on Slide 14, a firm spot market in the beginning of the year resulted in 12 VLCCs being ordered in the quarter VLCC scrapping has virtually stopped and we need to see a removal of tonnage in order to see a better fleet balance going forward as we have mentioned before. The order book represents about 15% of the fleet. If you go to Slide 15 and look at the Suezmax fleet the order book in the Suezmax segment is more balanced but we expect further ordering in this next segment for that reason unfortunately. Rates in the TCE market -- sorry I’ll go in the newbuilding prices first. Newbuilding prices did rise during the quarter but some of the big Korean shipyards opening up more 2016 berth we have seen prices decrease again and we estimate that orders can now be placed at around 95 million to 96 million for VLCCs and around 65 million to 66 million for Suezmax tankers for standard specification ship. The time charter market has about a limited time charter activity ongoing we estimate short-term time charter for VLCCs to be in the reach in the $23,000 a day and around $18,000 a day for Suezmax. If you go to Slide 17 an outlook as I mentioned 2014 started on a high note and no doubt we saw an increase in the number of cargo lifting and a positive tonne mile development. However, as we have clearly seen in the market lately the market is over supplied with ships and this is even with estimated 25 VLCCs not trading due to various financial holds and of course still with slow steaming in the fleet. We predict 2014 to be a very volatile year but with average rates higher and what we saw in 2013. As I mentioned due to slowdown in the offshore drilling market and LNG market we have seen some of the larger Korean shipyards freeing up extra yard space for 2016 and we sense that newbuilding prices are coming off. This could very well be a quite summer. Frontline ourselves we are now down to our core fleet with a minimum number of dockings this year. This is a proactive approach. We have managed to rearrange our newbuilding program Rongsheng which has improved the Company situation. We are continuing and monitoring the situation which is obviously very market-related and we are looking for opportunities to improve our balance sheet and the Company’s financial situation. With that I think we would like to take your questions. Thank you.

(Operator Instructions) We’ll now take our first question from Jon Chappell from Evercore. Please go ahead.

Thank you, good afternoon. I wanted to compare the strategy and outlook sections of the Frontline Ltd. press release and the Frontline 2012. You have done a good job with Frontline 2012 of selling the VLGCs, selling the Capesizes and you mentioned in their earnings release that the next step in the development of that Company is to sell the crude and product tanker fleet. Is Frontline in your mind positioned to be the natural dropdown destination for those assets or is the balance sheet just too much in disarray at the moment to accept those ships from Frontline 2012? Evercore Partners: Thank you, good afternoon. I wanted to compare the strategy and outlook sections of the Frontline Ltd. press release and the Frontline 2012. You have done a good job with Frontline 2012 of selling the VLGCs, selling the Capesizes and you mentioned in their earnings release that the next step in the development of that Company is to sell the crude and product tanker fleet. Is Frontline in your mind positioned to be the natural dropdown destination for those assets or is the balance sheet just too much in disarray at the moment to accept those ships from Frontline 2012?

I think there are various possibilities going forward I can’t say too much concrete about it right here in this call be we are looking at various ways to position both Frontline and of course Frontline 2012 going forward so I would say this is something that’s under discussion I can’t say more right now.

Okay. Can you talk about the potential financing, let's just take the Frontline 2012 out, if Frontline Ltd. were to return to a little bit more of an offensive mode, how do you kind of envision positioning the Company and the balance sheet with financing new vessels? Evercore Partners: Okay. Can you talk about the potential financing, let's just take the Frontline 2012 out, if Frontline Ltd. were to return to a little bit more of an offensive mode, how do you kind of envision positioning the Company and the balance sheet with financing new vessels?

Well I think right now of course we have seen now a much of an improvement a quarter can give compared to the fourth quarter last year and of course we have seen where we’re in the second quarter. So right now we’re very much looking at the market itself. And one of the things of course we have to do is to improve our balance sheet and then we’re looking at that and one aspect will be financing the newbuildings we have just re-arranged.

And you mentioned again the need for more scrapping and you were somewhat of a leader I think last year in sending some of your more modern ships to the scrap yards or [indiscernible]. How do you look at potentially disposing of anymore older tonnage at Frontline Ltd.? Do you want to try to be the market leader again or you mentioned core fleet. Are you happy with what you have today? Evercore Partners: And you mentioned again the need for more scrapping and you were somewhat of a leader I think last year in sending some of your more modern ships to the scrap yards or [indiscernible]. How do you look at potentially disposing of anymore older tonnage at Frontline Ltd.? Do you want to try to be the market leader again or you mentioned core fleet. Are you happy with what you have today?

Well right now the market at AG East is below operating cost and if that continues we will certainly look at scrapping more ships second half of the year. So I will not exclude that.

Okay. And then finally, and I then will turn it over, on your slides for the VLCCs and the Suezmaxes, it jumps to your attention that the second-quarter deliveries of both asset classes are pretty significant. Are you concerned that the second half of the year and potentially even the fourth quarter, which was quite strong last year, may be a little bit disappointing given the amount of deliveries scheduled for this quarter? Evercore Partners: Okay. And then finally, and I then will turn it over, on your slides for the VLCCs and the Suezmaxes, it jumps to your attention that the second-quarter deliveries of both asset classes are pretty significant. Are you concerned that the second half of the year and potentially even the fourth quarter, which was quite strong last year, may be a little bit disappointing given the amount of deliveries scheduled for this quarter?

Hopefully some ships will be scrapped before that.

Alright. Thanks a lot for your time, Jens. Evercore Partners: Alright. Thanks a lot for your time, Jens.

Thank you.

Thank you.

Thank you. We will take our next question from Taylor Mulherin from Deutsche Bank. Please go ahead.

Good afternoon how are you? Deutsche Bank: Good afternoon how are you?

Fine, thank you.

Fine, thank you.

So I just wanted to start off by asking a couple questions about the two Suezmaxes that you were able to swap at Rongsheng. So it sounds like it worked out pretty well from your perspective and just wanted to get a better sense of the color or of your color on what that negotiation looked like since it really did seem, at least from an outsider's perspective, to be a little bit one-sided in your favor. So I was just kind of curious if you can describe how you were able to negotiate a lower price and more prompt delivery? Deutsche Bank: So I just wanted to start off by asking a couple questions about the two Suezmaxes that you were able to swap at Rongsheng. So it sounds like it worked out pretty well from your perspective and just wanted to get a better sense of the color or of your color on what that negotiation looked like since it really did seem, at least from an outsider's perspective, to be a little bit one-sided in your favor. So I was just kind of curious if you can describe how you were able to negotiate a lower price and more prompt delivery?

I think it was more of a win-win situation for both the shipyard and ourselves another customer had terminated two contracts for our ships which were nearly completed and we stepped into those two contracts and then got out of our own existing order. So I think both the yard and ourselves and the Chinese financial institution which financed these ships were happy about arrangements and that’s how it came about.

Makes sense. And then just from like a broader perspective, given your obvious near-term cash needs, was there any thought into, instead of doing this, just trying to resell these agreements and try to raise cash or is that something that you are kind of more focused on doing with potentially older tonnage later on in the year? Deutsche Bank: Makes sense. And then just from like a broader perspective, given your obvious near-term cash needs, was there any thought into, instead of doing this, just trying to resell these agreements and try to raise cash or is that something that you are kind of more focused on doing with potentially older tonnage later on in the year?

No if the right opportunity comes up we could sell these ships that is one thing we can do.

Okay. And then my last one, just kind of a broader sort of strategy perspective, obviously Q2 is looking to be pretty challenging and I know a lot of that is from a seasonal perspective, but especially given what Jon said with the Q2 deliveries in both the Suezmaxes and VLCCs, if the market doesn't materialize here, are you factoring in a potential plan to sort of resolve your situation without a recovery or does there need to be at least some sort of crude tanker recovery for you guys to be able to be successful going forward? Deutsche Bank: Okay. And then my last one, just kind of a broader sort of strategy perspective, obviously Q2 is looking to be pretty challenging and I know a lot of that is from a seasonal perspective, but especially given what Jon said with the Q2 deliveries in both the Suezmaxes and VLCCs, if the market doesn't materialize here, are you factoring in a potential plan to sort of resolve your situation without a recovery or does there need to be at least some sort of crude tanker recovery for you guys to be able to be successful going forward?

I think in an improved market the possibilities and opportunities we will have will be greater of course than if we’re going into a long and hard second half of the year. So I think we’re all hoping that the market will re-bounce and second quarter is almost done and that will be weak but we hope that the market has reached the bottom and we’ll start to increase again.

Okay, thanks for your time. Deutsche Bank: Okay, thanks for your time.

Thank you.

Thank you.

Thank you. We will take our next question from Herman Hildan from RS Platou Markets. Please go ahead.

Hi my first question, it seemed at least for the previous Suezmaxes that you had on order, it was quite likely that you would be in a position to terminate those newbuildings given the severe delays. As such, I understand that you are going to -- you have found a solution to the whole Suezmax orders by swapping. I mean is the intention to sell them or given your current liquidity position? RS Platou Markets: Hi my first question, it seemed at least for the previous Suezmaxes that you had on order, it was quite likely that you would be in a position to terminate those newbuildings given the severe delays. As such, I understand that you are going to -- you have found a solution to the whole Suezmax orders by swapping. I mean is the intention to sell them or given your current liquidity position?

It could be a possibility that we sell them and we will see how the market develops, if the right buying opportunity comes along, we can sell the ships there is nothing cast in stone so that could be a solution yes.

But in terms of supervision of the newbuildings, since the owner or the previous owner walked away from them, are you comfortable that you will be able to get a good price or how should we think about that? RS Platou Markets: But in terms of supervision of the newbuildings, since the owner or the previous owner walked away from them, are you comfortable that you will be able to get a good price or how should we think about that?

Obviously, we have had a look at the ships before we bought them and they seem to be well supervised quite far in the building process, so they seem to be good ships.

Okay. Thank you. RS Platou Markets: Okay. Thank you.

Thank you.

Thank you.

Thank you. We will take our next question from Matthias Detjen from Morgan Stanley. Please go ahead.

Good morning. I just wanted to follow up on -- you were talking about the cleaning up the balance sheet a little bit and I was wondering if you could maybe give us some colors or possibilities you see there. Is there anything that you are planning besides the ATM offering and if you could just maybe give us a bit more color there?

Good morning. I just wanted to follow up on -- you were talking about the cleaning up the balance sheet a little bit and I was wondering if you could maybe give us some colors or possibilities you see there. Is there anything that you are planning besides the ATM offering and if you could just maybe give us a bit more color there?

Sorry, if we are planning to do more of the ATM offering, is that what your question was?

Yes, or like if there is any other things that you are planning on doing besides the ATM offering.

Yes, or like if there is any other things that you are planning on doing besides the ATM offering.

I don’t think we should be very specific on the all the different opportunities that we are looking into but obviously a good source of option can be looked into as we also are writing in the press release.

Okay, well that was it for me everything has been asked. Thank you.

Okay, well that was it for me everything has been asked. Thank you.

Yes.

Thank you. We will take our next question from Erik Paulsson from Pareto Securities. Please go ahead.

Hi, just on the Suezmax vessels, to revert to them again, we were under -- a lot of analysts have been under the impression that Rongsheng wouldn't be able to deliver. Should we now expect the 20 plus vessels from Rongsheng over the next 12 to 18 months or do you think these were two sort of almost completed vessels that will be delivered? I mean they recently delivered another one for [indiscernible] was alright? Pareto Securities: Hi, just on the Suezmax vessels, to revert to them again, we were under -- a lot of analysts have been under the impression that Rongsheng wouldn't be able to deliver. Should we now expect the 20 plus vessels from Rongsheng over the next 12 to 18 months or do you think these were two sort of almost completed vessels that will be delivered? I mean they recently delivered another one for [indiscernible] was alright?

I think you are right about that I think you should not expect, what you said 12 to 18 ships being delivered, I think it’s -- the delivery process there are slowing down, so I think that the yard will probably take it ship-by-ship that’s how we read it at least.

Okay. And you see obviously that’s -- if these ships are well-functioning, it could be tempting for the Frontline system to do similar deals. Are those deals available to kind of go in there with your expertise and capital to finish unfinished ships? I know this wouldn't be for Frontline, but for the group? Pareto Securities: Okay. And you see obviously that’s -- if these ships are well-functioning, it could be tempting for the Frontline system to do similar deals. Are those deals available to kind of go in there with your expertise and capital to finish unfinished ships? I know this wouldn't be for Frontline, but for the group?

I will say other possibility is there, but I think right now we wanted to solve the situation and are owing to old contracts which we have done but there could be other opportunities going forward yes.

Okay. And then just on the more broader level, I kind of sense and I think everybody is sensing that you were a lot more optimistic on your Q4 conference call a couple of months back. I mean except for the ordering and the more limited scrapping pace, what has really changed on the demand side in the crude space? Has there been any change or are we kind of at the same level that we were a couple of months ago? Pareto Securities: Okay. And then just on the more broader level, I kind of sense and I think everybody is sensing that you were a lot more optimistic on your Q4 conference call a couple of months back. I mean except for the ordering and the more limited scrapping pace, what has really changed on the demand side in the crude space? Has there been any change or are we kind of at the same level that we were a couple of months ago?

No I think end of January, or early February the market was around $40,000 a day which was of course very good and then it just completely dropped out of demand mainly because of the Chinese New Year end of January and that seems like the Chinese have really been active, first two three weeks of January which puts the rates up and now we are back to, I wouldn’t say square one, we are back to a market where we are oversupplied with ships. There is still slow steaming which is of course not really taking any effect and there is an imbalance in the market, I think the easiest way to describe it there is too many ships.

Okay, so you think we are at -- just to compare with a year ago then, do you think we are back at square one or are we in a weaker market than a year ago or are we in a better market? Just to try to kind of get your sense on where we will go this winter? Pareto Securities: Okay, so you think we are at -- just to compare with a year ago then, do you think we are back at square one or are we in a weaker market than a year ago or are we in a better market? Just to try to kind of get your sense on where we will go this winter?

It’s difficult to say, I think of course we have helped by the strong quarter, a first quarter everybody has had that we will have a better year this year and last year but that doesn’t say a lot in terms of profitability. I think we will see a very volatile year, depends a lot on the Atlantic program. Now, we are seeing Suezmax is strengthening in the Atlantic and of course immediately VLCCs will start to balance in from the East directly into the West Africa and the Atlantic market, if that trend happens there will be a shortage in the Persian Gulf which we can maybe feel in four to five weeks from now. So, these’s things happening in the market but it’s difficult to read when exactly is happening but we need to have a volatile market to have the rates moving from where we are now.

Okay thank you Jens and Inger. Pareto Securities: Okay thank you Jens and Inger.

Thank you.

Thank you.

Thank you. (Operator Instructions) We will take our next question [indiscernible] from Inter Invest. Please go ahead.

Hello, good morning everybody.

Good morning.

What alternatives is Frontline handling with its 4.5% stake in Frontline 12, is it going to sell it to improve its balance sheet because I have been making my numbers and it’s currently worth around $100 million in the OTC market in Norway? Thank you.

Well that could be one of the possibilities going forward to sell that like one of the earlier calls was to sell out of the new building programs, so there is a few tools and instruments in our box that we can use and then they are all being evaluated and considered. And right now I can’t tell you exactly when and if this will happen but it is a possibility yes.

Okay. Thank you very much. My other question is how are the plans because in the last conference call you said in Q3, 2013 Frontline 12 will go public in U.S. stock market, what’s the-- is there any more news in the plans to go public because that would be very good to really sell the stake?

This is not a Frontline 2012 call, but so I prefer if you call separately or send an email and then maybe we can have that conversation separately if that’s okay?

Okay. I really appreciate your time. Thank you very much.

Thank you, thank you.

Thank you. (Operator Instructions) There are no further questions at this time.

Thank you everybody for dialing-in and listening to our presentation and I would like to thank everybody in the Company for work and efforts during the first quarter this year. Thank you.

Thank you. That will conclude today’s conference call. Thank you for participation ladies and gentlemen. You may now disconnect.